When the budget for the General Fund is recorded, the required journal entry will include:
A) A credit to Estimated Revenues.
B) A debit to Encumbrances.
C) A credit to Appropriations.
D) A credit to Fund Balance.

Question

Quizplus · Accepted Answer

The journal entry for recording the budget for the General Fund includes a credit to Appropriations because it represents the legal authority to spend the budgeted amount for the specific purpose. The Estimated Revenues account is not affected because the budget is a plan for future revenues and not actual revenues. Encumbrances are not recorded in the budget entry because they represent commitments to spend funds that have already been budgeted. A credit to Fund Balance is not appropriate as it represents the residual equity in the fund after accounting for liabilities and expenditures.

When the Budget for the General Fund Is Recorded, the Required